State paying Medicaid bills before interest piles up

Dec. 18--Illinois is finally paying Medicaid bills before they have a chance to accumulate late payment penalties, Comptroller Susana Mendoza's office said Friday.

It's a far cry from earlier this fall when the state was running up $2 million a day in interest penalties on overdue bills.

"The Medicaid bill payment cycle is faster than it has ever been since Comptroller Mendoza took office and is below the 90-day deadline for accruing interest," said Mendoza spokeswoman Jamey Dunn.

Mendoza has been in office for about a year.

Targeting overdue Medicaid bills was part of the plan when lawmakers authorized the sale of $6 billion in bonds as part of the budget deal last summer. The idea was two-fold. Paying off the old bills would stop the accumulation of late payment charges the state owed on them. Also, paying the bills would generate federal reimbursements that could be directed at further paying down the backlog.

At the end of October, the bill backlog stood at nearly $16.4 billion, a record amount for the state. That was just before the bonds were sold and the proceeds used to pay down the backlog. As of Friday, the backlog was down to $9.4 billion.

Mendoza's office said that it has paid off more than $4 billion in state employee health insurance bills, some of which had been sitting around for two or more years because the state didn't have a budget to authorize payment of them. It also said Medicaid payments generated about $2.2 billion in federal reimbursements that were used to further pay down the bill backlog.

The office, though, cannot provide a specific number for interest being saved by the bills being paid.

But while a dent was made in the backlog, there is still work to be done. Dunn said the office believes there is still about $1.3 billion of state employee health insurance bills that are waiting to be paid. And while progress has been made on paying down medical bills, there is still a lengthy delay in paying other bills. The office said the oldest commercial bill still waiting to be paid is dated March 1. By the end of the year, the office expects that to be cut to April 1.

All of the money from the bond sale has been spent, which means there won't be further dramatic reductions in the backlog, barring further action by the General Assembly.

It also means the bill backlog doesn't grow unexpectedly when a new reporting law goes into effect in January. Mendoza pushed for legislation this year that requires state agencies to provide monthly reports on the amount of bills sitting in state agencies that must be paid but haven't yet been sent to the comptroller's office for payment. Now, the comptroller's office must estimate those bills. Of the $9.4 billion bill backlog, about $2.6 billion is the office's estimate of what is sitting in state agencies.

Gov. Bruce Rauner vetoed the bill, saying it was an effort by Mendoza and House Speaker Michael Madigan, D-Chicago, to interfere with agency operations. He also said it would be burdensome for state agencies to report on unpaid bills every month. Nonetheless, lawmakers overrode the veto.

Dunn said comptroller's staff have been working with state agencies to see that the law is implemented on time.

"Everything is going as planned," she said.

Rauner spokeswoman Patty Schuh said dealing with the law is made more difficult because of outdated computer systems and "is further complicated by the comptroller's lack of cooperation in modernizing the state's IT systems."

"We are awaiting the comptroller's template for the report and timelines that will be expected," she said in a statement. "Upon receipt of that information, state agencies will be working vigorously to comply with the state law."